PanCanadian Petroleum Ltd. completed its C$65 million (US$43 million) acquisition of Causeway Energy Corp., which is now a subsidiary of the Calgary-based producer. The acquisition, which includes the assumption of C$4 million of Causeway debt, includes properties in northern Montana and southern Saskatchewan, including 210,000 net acres of undeveloped land. The acquisition adds 8.5 MMcf/d of production to PanCanadian’s production levels and adds 80 Bcf of proven and one-half probable reserves. A 100% interest in the cross-border Chinook Pipeline is also included in the deal. As part of the transaction, Causeway sold its Medicine Lodge assets and its Palau concession to Bushmills Energy Corp., a Causeway subsidiary. Under the merger agreement, Causeway shareholders will receive C$2.58 in cash for each share and one-fifth of a common share of Bushmills. Causeway’s officers, directors and other shareholders hold 44% of the outstanding shares of stock on a fully diluted basis.
Despite the drop in natural gas prices, Vancouver-based Methanex has extended the shutdown for an “indeterminate period” of its 470,000 tons/year Medicine Hat, AB facility, which uses natural gas in its methanol production because of the plant’s “current non-competitive cost structure.” However, Methanex said it would move ahead on construction of a new facility in Trinidad, which it said will be less costly to operate. Customers now supplied from Medicine Hat will be supplied by other Methanex locations. With the shutdown, the company said it expects to realize annual plant fixed and capital maintenance cost savings of about $10 million because the plant will be mothballed and the 95 employees relocated to other facilities or laid off. In the third quarter of 2001, Methanex said there will be a one-time charge to earnings of approximately $11 million, mostly for employee severance and mothballing costs. The Medicine Hat closure, officials noted, “was necessary to balance production levels with global customer requirements …. global economic growth has resulted in softer demand for methanol and lower methanol prices.”
Kansas City, MO-based Aquila Inc. and its Radius Group has released its latest risk management product, Risk180(SM), which provides clients with full-service management of their commodity transactions delivered daily, weekly or monthly via the Internet. Risk180 will be marketed to utilities, municipalities, energy aggregators and small energy marketers, as well as large industrial firms. The product is targeted toward clients that are typically low-volume traders who use spreadsheets to manage their energy transactions. The product was designed to meet the deal capture and portfolio valuation needs of clients who do not wish to purchase or build an expensive, enterprise-wide risk management software system. Risk180 uses a password-protected web-interface, which allows clients to send Aquila their transactions or trades, which are then processed through the company’s proprietary system. The client then receives daily, weekly or monthly risk analysis and deal pricing reports. “What we are doing is making it possible for these clients to have access to a highly sophisticated trading organization, its skills and most important, its collective knowledge,” said Jennifer Fisher, Aquila vice president and head of the Radius Group. Aquila’s Radius Group jointly developed Risk180 with SunGard Trading and Risk Systems, an energy risk management software firm. Aquila said that a key component of the Risk180 package is its use of SunGard’s Epsilon software for risk analysis and client reporting. Initially, Risk180 will handle only natural gas transactions with power transaction capabilities to be added in the near future. Data available to clients includes detailed portfolio valuation, evening over-the-counter trade previews, mark-to-market income reports, total position reports as well as forward curves, deal capture and value-at-risk calculations. Additional information is available at www.aquila.com, or www.risk180.com.
Gastar Exploration Ltd. has acquired, in arms-length transactions, a 75% working interest in about 4,000 net acres of leases in Campbell County, WY, as well as 11 pilot test wells and other acreage in the Appalachian Basin. The Wyoming acreage, located in the Squaw Creek area, is part of the Powder River Basin, which is rich in coalbed methane (CBM) deposits. It already has 65 CBM wells in the initial stages of dewatering and production, with several realized production rates approaching 75 Mcf/d after less than two months of dewatering. No financial details were disclosed for either deal. The Appalachian Basin acquisition is located in West Virginia and Pennsylvania. Interests acquired equal up to a 75% working interest in 11 pilot test wells, 200,000 acres of undeveloped leases, and existing and newly acquired proprietary 2-D seismic data totaling nearly 300 miles. The pilot test wells have recently been drilled and are in the initial stages of production start-up. As part of its long-term strategy, Gastar also has entered into a long-term gathering and marketing agreement with an undisclosed major natural gas transportation and marketing company to provide Gastar with markets for all volumes projected to be produced from the Squaw Creek area. The agreement calls for approximately 500 Mcf/d of gas transportation capacity to be available immediately, with an additional capacity of 3.7 MMcf/d by the end of the first quarter of 2002. The agreement also calls for the ability to increase gas volumes in increments of 4.5 MMcf/d as required by Gastar.
Dallas-based TXU has jumped into the lucrative energy asset management service after launching TXU Utility Solutions, which will offer unregulated utility asset management for North American cooperatives, which are municipally owned and investor-owned utilities. Utility asset management has grown to a $20 billion industry, and within five years, the TXU subsidiary plans to capture as much as 4% of the marketplace. By focusing on cooperatives, TXU is putting its strategy toward a different type of retail market. Potential clients will be able to choose from several types of services, including complete turnkey solutions to selected services, including work management, strategic planning design, maintenance and construction. “We’ve already received interest from more than a dozen companies throughout North America, and would expect to have our first contracts before the end of the year,” said Wade Freeman, general manager of TXU Utility Solutions.
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